In a dispute relating to the construction project that was examined by the courts at the end of June 2016, there was no agreement between the contractor and the subcontractor, but the court decided that, in practice, the parties acted as if there was a back-to-back clause, and the original not only authorized all payments, but acted directly with respect to the subcontractor to authorize the work. The Tribunal decided that payment to the subcontractor was subject to receipt of payment by the main contractor. The first approach is often seen by contractors as the simplest and therefore most cost-effective way to transfer liabilities. However, in the absence of special attention, such an approach can often lead to difficulties. Particular attention should be paid when drawing up compliance rules. For example, a general provision stating that all references contained in the main contract to “the employer” and the “main contractor” in the subcontract can be read as references to the “main contractor” or “subcontractor”, cannot be adapted to all obligations and lead to a significant duration of the contract either being inoperative, is subject to an interpretation that has never been contemplated. In addition, in the case of long and detailed basic contractual specifications (often in the form of employer requirements), it can be a very complex and, indeed, controversial task to separate the obligations that are relevant for each subcontract. The main concern of subcontractors is that they accidentally take the risk of inappropriate questions given the scale and scale of their subcontracting. For many construction projects, the contractor enters into an agreement with a contractor for the entire work and the contractor then enters into subcontracts for segments of the work.
Agreements entered into by the subcontractor often contain a back-to-back clause. The importance of a back-to-back clause is that the agreement between the main contractor and the subcontractor is subject to the agreement between the original customer and the main contractor and that the original customer is usually the only one to confirm the work and that the payment and payment from the main contractor to the subcontractor depends on the receipt of payment from the main contractor. As contractors increasingly assign much of their work to others, the construction production chain has become longer and more complex. It is important that all parties ensure that certain rights and obligations are not only in their own agreements, but also in agreements with other parties. This ensures that the prime contractor is not responsible for all obligations to the employer, that subcontractors have enforceable rights, and that schedules are coordinated throughout the supply chain. . . .
